Indore: Mandatory for companies to keep accounts with audit trail

Indore: Mandatory for companies to keep accounts with audit trail

Penalty of Rs 5 lakh on company that fails to maintain audit trail

Staff ReporterUpdated: Sunday, April 09, 2023, 07:16 AM IST
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Indore (Madhya Pradesh): CA Aseem Trivedi said that the new rule of audit trail, which has been made effective from April 1, makes it mandatory for companies to maintain the accounts in the software which allows for audit trail.

If the company does not maintain this audit trail, then a penalty of up to Rs 5 lakh can be imposed.

After the new provision made in the Companies Act, only that software should be used, which has the ability to record every transaction of the audit trail.

CA Trivedi said this while addressing a seminar organised to analyse the new provisions made mandadatory for the companies from April 1, 2023. The seminar was organised by CA Indore branch.

CA Trivedi said that if any company has not started audit trail log in its software since 1st April then the company has already started violating the rule and it should be ready to pay from penalty of anywhere between Rs 50000 and Rs 500000. Every auditor has to indicate in his audit report the time when the company has started the audit trail. The cash account of the company will have to be closed on 31st March, after 31st March it will not be able to make cash entry.

The record of changes in the books of accounts of all the companies will be kept through the software. The rule of audit trail has come into force in the maintenance of accounts of companies in the new financial year starting from Saturday.

The Ministry of Corporate Affairs had notified the provision of audit trail on March 24, 2021 itself but has been implemented now.

With every transaction in the audit trail, the record of changes and amendments in the account will also be recorded in a phased manner.

The rule also says that the company will have keep record of the trail safe for 8 years. If the company does not maintain this audit trail, then a penalty of up to Rs 5 lakh can be imposed on that company and the auditor will have to issue a qualified report.

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